Legislature(2005 - 2006)SENATE FINANCE 532

01/19/2006 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
Moved CSSB 55(FIN) Out of Committee
Bills Previously Heard/Scheduled
9:49:52 AM                                                                                                                    
     CS FOR HOUSE BILL NO. 283(STA)                                                                                             
     "An Act relating  to the compensation for board  members of the                                                            
     Alaska  Housing  Finance  Corporation;  and  providing  for  an                                                            
     effective date."                                                                                                           
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
BRYAN BUTCHER, Director,  Governmental Affairs and Public Relations,                                                            
Alaska Housing  Finance Corporation, read testimony  into the record                                                            
as follows.                                                                                                                     
     House Bill 283 simply  would increase board member compensation                                                            
     for board  meetings from $100 to $400 for the  board members of                                                            
     the Alaska Housing  Finance Corporation. Our board of directors                                                            
     is required  to review  and consider topics  having to  do with                                                            
     bonding,  the mortgage industry, public housing  and many other                                                            
     technical issues.                                                                                                          
     In any given  year, the board is asked to consider  and approve                                                            
     anywhere  from $600 million to $1 billion in  bond programs and                                                            
     millions  of dollars in tax credit and other  federal programs.                                                            
     The workload is such  that the board members must spend a great                                                            
     deal of their  personal time studying and educating  themselves                                                            
     about corporate activities.                                                                                                
     HB 283 increasing  the compensation to $400 would be increasing                                                            
     it  to the  same level  of  other boards,  such  as the  Alaska                                                            
     Railroad    [Corporation],   the   [Alaska]   Permanent    Fund                                                            
     [Corporation], and the Retirement Management Board.                                                                        
     The compensation  would only  apply to the four public  members                                                            
     of the  board who are Frank Roppel  of Wrangell, Bert  Sharp of                                                            
     Fairbanks,  Clay Porter  of Anchorage  and Marty Shuravloff  of                                                            
     We estimate  it would cost approximately  $20,000 in  Corporate                                                            
     receipts a year to make this change.                                                                                       
9:51:45 AM                                                                                                                    
DAN  FAUSKE,  Chief Executive  Officer/Executive   Director,  Alaska                                                            
Housing Finance  Corporation, testified  via teleconference  from an                                                            
offnet location  that the board activities  have expanded  since the                                                            
honoraria was  last increased in 1971.  The proposed increase  would                                                            
serve as a positive  compensation for board members'  time away from                                                            
other activities.                                                                                                               
9:52:26 AM                                                                                                                    
Co-Chair  Wilken characterized  this  legislation  as a "subjective                                                             
call". He referenced  an interoffice  memorandum from the  Office of                                                            
the Governor dated February  9, 2005 [copy on file], which lists the                                                            
honoraria  paid to members  of other boards  overseen by the  State.                                                            
Before he could  support an increase for the Alaska  Housing Finance                                                            
Corporation  (AHFC)  board  members,  he  needed  information  about                                                            
qualification  and duties  of members,  as well  as how the  members                                                            
were selected.  He was unsure if the  amount should be increased  to                                                            
$400 regardless.  If this  legislation passed,  he anticipated  that                                                            
all of the other  boards would request increases for  their members.                                                            
9:53:39 AM                                                                                                                    
Mr. Butcher  responded that  the governor  appoints the four  public                                                            
board members. Frank Roppel  had chaired the AHFC board of directors                                                            
during  the 1970s  and 1980s. Bert  Sharp had  "extensive  dealings"                                                            
with the  Corporation during  his tenure in  the Senate and  seat on                                                            
the Senate  Finance Committee. Marty  Shuravloff is the head  of the                                                            
Kodiak Regional  Housing Authority. Clay Porter is  an architect who                                                            
has  been involved  in  the housing  industry  for "many  years"  in                                                            
Southcentral  Alaska and  serves on  the board of  the Cold  Climate                                                            
Research Center in Fairbanks.                                                                                                   
9:54:33 AM                                                                                                                    
Mr. Fauske  furthered that the areas  of expertise of board  members                                                            
are  specified in  statute.  The expertise  of  one  member must  be                                                            
"rural", one seat  is designated for an expert in  health and social                                                            
services,  one seat  is  designated  for a  finance  expert and  one                                                            
member must have energy  expertise. Names of potential board members                                                            
are  submitted   to  the   governor  for   appointment  along   with                                                            
recommendations  based   on the  candidates'   qualification  for  a                                                            
particular seat.                                                                                                                
9:55:14 AM                                                                                                                    
Senator Stedman agreed  with Co-Chair Wilken that this matter should                                                            
be  further  reviewed to  determine  if  the  impact could  be  more                                                            
9:55:38 AM                                                                                                                    
Senator  Olson also  agreed.  He qualified  that  the  issue is  not                                                            
whether these  board members are deserving  of higher compensation.                                                             
Rather the  concern is that this could  "snowball" and other  boards                                                            
could  deem   increased  compensation   for  their  members   as  an                                                            
achievable goal.                                                                                                                
9:56:12 AM                                                                                                                    
Mr.  Fauske told  of  former AHFC  board  member, Mike  Cook,  whose                                                            
activities with the board  "cost him a great deal personally because                                                            
it  kept  him away  from  his  business."  Mr. Cook  held  the  seat                                                            
designated  for a finance expert and  spent numerous hours  ensuring                                                            
that federal regulations were complied with.                                                                                    
Mr. Fauske pointed out  that this Corporation has "delivered back to                                                            
the State" almost  $1.4 billion in returns over the  past ten years.                                                            
The  efforts  required   of  board  members  and  subsequent   funds                                                            
generated  for the  State should  be compensated  in  an ability  to                                                            
attract competent members.                                                                                                      
9:57:14 AM                                                                                                                    
Senator Olson  asked how difficult  it is to recruit board  members.                                                            
9:57:23 AM                                                                                                                    
Mr.  Fauske spoke  of conflicts  potential  board  members, such  as                                                            
bankers,  homebuilders   and  others,   have  in  wanting   business                                                            
relations  with AHFC.  Service  on the  board takes  time away  from                                                            
members' other  activities. Members  are also prohibited  from doing                                                            
business with the Corporation.                                                                                                  
9:58:37 AM                                                                                                                    
Senator Olson  asked if the proposed  $400 honoraria would  increase                                                            
the number  of qualified applicants  willing to serve on  the board.                                                            
9:58:54 AM                                                                                                                    
Mr. Fauske replied  that this would not necessarily  occur. It could                                                            
influence a potential member's  decision when considering the amount                                                            
of  time   involved   in  holding   the  position.   The   increased                                                            
compensation would be "very helpful" to the Corporation.                                                                        
9:59:17 AM                                                                                                                    
Co-Chair   Wilken  reiterated   that   the  proposed   increase   is                                                            
subjective.  He requested a written  description of the four  public                                                            
seats,  the required  qualifications,  and  the backgrounds  of  the                                                            
current  members,  their  other  employment  or  whether  they  were                                                            
10:00:03 AM                                                                                                                   
Co-Chair Wilken  reminded that the  legislature increased  honoraria                                                            
for the  Alaska Retirement  Management Board  the previous  hear, an                                                            
action he supported. However,  he cautioned that if this legislation                                                            
passed,  the   legislature  must   be  prepared  for  requests   for                                                            
additional compensation increases.                                                                                              
Co-Chair  Wilken  stressed  his  concerns  did not  pertain  to  the                                                            
expertise and public service of board member Bert Sharp.                                                                        
10:00:56 AM                                                                                                                   
Co-Chair Green  stated that information  regarding the functions  of                                                            
other  boards and  the amount of  investment  capital handled  would                                                            
assist  in this  decision.  Some  boards  operate more  as  decision                                                            
makers than investors.                                                                                                          
10:01:20 AM                                                                                                                   
Mr. Butcher would provide the requested information.                                                                            
10:01:32 AM                                                                                                                   
Co-Chair Wilken suggested  that the honoraria rate of all the boards                                                            
could be reviewed  simultaneously. A determination  could be made to                                                            
increase the compensation  for all members to an amount  of $250. He                                                            
admitted that those requesting  an increase to $400 would likely not                                                            
be satisfied.                                                                                                                   
10:02:03 AM                                                                                                                   
Co-Chair Green ordered the bill HELD in Committee.                                                                              

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